Morningstar Advisor - December 2010/January 2011 - (Page 32)

Behavior Gap A Future in Questions, Not Answers By Carl Richards Asking great questions is an incredibly valuable skill, but paradoxically, having the right answers might not be as valuable as we think. Business strategist Seth Godin recently wrote: “You can add value in two ways: You can know the answers [or] you can offer the questions. Relentlessly asking the right questions is a long-term career, mostly because no one ever knows the right answers on a regular basis.” I have always valued Godin’s work, and I now realize that it’s because he asks a lot of the right kind of questions—questions that get me on the right path. Learning to ask meaningful questions is particularly valuable in our business because there are so few “right” answers. This applies to the questions we ask our clients, but it starts with the questions we should be asking ourselves. I have noticed that many people in the traditional financial-services industry don’t like questions. Consider how dismissive the passive investing crowd can be about an actively managed investment strategy, and vice versa. When is the last time you heard an open-minded conversation about Modern Portfolio Theory? Because there is very little in the field of investment advice that would qualify as settled doctrine, it seems to me that we actually get paid to be open to new ideas. With so much at stake, why are we so afraid of questions? We don’t like confusion. It’s human nature to avoid things we don’t understand because often that leads to confusion, and as the great design thinker Richard Saul Wurman said, “Confusion is anti-American.” We don’t like being wrong. Asking questions, and carefully considering what we learn, requires us to be open to the possibility that we might be wrong. When we tie our value to the answers instead of the questions, being wrong can also be seen as a disaster for our business. We don’t like to think. We may dismiss new information out of intellectual and emotional laziness. It takes less work to defend an outdated map (even if it’s wrong) than it does to consider a new one. We assume that clients value our certainty instead of our inquiry. But in an environment where we’re becoming increasingly confident that we don’t know what will happen, our value lies not in knowing the future, but in our confidence that we know how to figure this stuff out. We know how to ask the right questions to navigate the changing landscape. The good news is that clients know we don’t have all the answers, so the worst thing we can do is pretend that we know the answers. It is far more valuable to build a long-term career as the professional who asks the right questions and then helps people deal with whatever the answers bring. K Carl Richards helps financial advisors have better conversations with their clients through his sketches and writings at He has run his own successful financial planning practice for close to 15 years and lives in Park City, Utah. 32 Morningstar Advisor December/January 2011

Table of Contents for the Digital Edition of Morningstar Advisor - December 2010/January 2011

Morningstar Advisor - December 2010/january 2011
New on
Letter From the Editor
What Strategies Do You Use to Help Retirees Hedge Against Longevity Risk?
Investment Briefs
Four Picks for the Present
Scaring the Swiss
Tech Is the Apple of Managers’ Eyes
How to Read an Sec Filing
A Strategy That Loves Performance Chasers
Things Fall Apart, Even in Industrials
A Future in Questions, Not Answers
Research Over Chocolates
Creating Portfolios That Confront Retirement’s Risks
Building in-Retirement Portfolios to Last
On the Lookout for Guaranteed Income Streams
What Fires Up Mairs & Power
All Aboard!
Aiming at Alternatives
Stuff Your Stocking with Out-of-Favor Bargains
Stable, High Yields (No Bonds Included)
Mutural Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks with Wide Moats
Twelve Bee, Huh?

Morningstar Advisor - December 2010/January 2011